A roundup of news, schedules, and key stories from CBS News Political Director Steve Chaggaris:
4861593Today, Treasury Secretary Timothy Geithner makes his second attempt at unveiling the Obama Administration's plan to deal with the banking crisis, though you won't actually see Geithner talking about it until later tonight.
He's briefing reporters this morning (no TV cameras allowed) before meeting with President Obama and Vice President Biden (where we'll get a brief glimpse of him). Tonight he'll deliver a speech to the Wall Street Journal Future of Finance Initiative.
Geithner did lay out the "Private-Public Investment Program" in an op-ed in today's Wall Street Journal: "[The] Program will purchase real-estate related loans from banks and securities from the broader markets. Banks will have the ability to sell pools of loans to dedicated funds, and investors will compete to have the ability to participate in those funds and take advantage of the financing provided by the government. The funds established under this program will have three essential design features. First, they will use government resources in the form of capital from the Treasury, and financing from the FDIC and Federal Reserve, to mobilize capital from private investors. Second, the Public-Private Investment Program will ensure that private-sector participants share the risks alongside the taxpayer, and that the taxpayer shares in the profits from these investments.
"These funds will be open to investors of all types, such as pension funds, so that a broad range of Americans can participate. Third, private-sector purchasers will establish the value of the loans and securities purchased under the program, which will protect the government from overpaying for these assets. The new Public-Private Investment Program will initially provide financing for $500 billion with the potential to expand up to $1 trillion over time, which is a substantial share of real-estate related assets originated before the recession that are now clogging our financial system. Over time, by providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets. The ability to sell assets to this fund will make it easier for banks to raise private capital, which will accelerate their ability to replace the capital investments provided by the Treasury."
Full details: http://www.financialstability.gov/
"The announcement is a major test for Geithner, whose first speech on the financial rescue Feb. 10 offered so few details that it triggered a sell-off in financial stocks," write Bloomberg News' Robert Schmidt and Rebecca Christie. "Adding to the pressure on the administration is an unprecedented wave of populist anger over the rescue thus far, following the revelation that employees of American International Group Inc. got $165 million in bonuses after the insurer received taxpayer funds."
"The effort is part of Mr. Geithner's broader plan to stabilize the financial system and builds on earlier programs to pump capital into banks, restart consumer and small-business lending, and help some homeowners pay their mortgages," reports the Wall Street Journal's Deborah Solomon. "Many economists argue that financial firms need to purge troubled loans and securities clogging their balance sheets if they are to regain the confidence to resume lending. Mr. Geithner outlined the latest effort in general terms last month, and Wall Street has been eagerly awaiting details. But the rollout comes at an inopportune time, with bailout fatigue turning to rage amid a furor over bonus payments to employees of American International Group Inc. As a result, whether or not the prescription is correct to fix what ails the financial sector, there is likely to be concern about an effort that appears to reward Wall Street. Some investors have already said they're leery of working with the government for fear the rules will change midstream, as is happening with Congress's moves to cap Wall Street bonuses for firms receiving financial aid."
"Obama administration officials worked Sunday to persuade reluctant private investors to buy as much as $1 trillion in troubled mortgages and related assets from banks, with government help," add the New York Times' Aaron Ross Sorkin, Eric Dash and Rachel L. Swarns. "The talks came a day before the Treasury secretary, Timothy F. Geithner, planned to unveil the details of the administration's long-awaited plan to purchase troubled assets, meant to remove them from the balance sheets of banks and, in turn, spur banks to lend more money to consumers and companies. The plan relies on private investors to team up with the government to relieve banks of assets tied to loans and mortgage-linked securities of unknown value. There have been virtually no buyers of these assets because of their uncertain risk. As part of the program, the government plans to offer subsidies, in the form of low-interest loans, to coax private funds to form partnerships with the government to buy troubled assets from banks. But some executives at private equity firms and hedge funds, who were briefed on the plan Sunday afternoon, are anxious about the recent uproar over millions of dollars in bonus payments made to executives of the American International Group. Some of them have told administration officials that they would participate only if the government guaranteed that it would not set compensation limits on the firms, according to people briefed on the conversations. The executives also expressed worries about whether disclosure and governance rules could be added retroactively to the program by Congress, these people said."
4874187AIG FALLOUT: "Since the fall, senior aides to Timothy Geithner have closely dealt with American International Group Inc. on compensation issues including bonuses, both from his time as president of the Federal Reserve Bank of New York and as Treasury secretary," report the Wall Street Journal's Michael M. Phillips and Sudeep Reddy. "The extent of their involvement, which wasn't widely known, raises fresh questions about whether Mr. Geithner could have known earlier about AIG's $165 million in bonus payments. When the bonuses sparked a political firestorm last week, Mr. Geithner said he learned about their full scope in early March, just days before they were paid."
"As New York Fed president, Mr. Geithner was central to AIG's initial $85 billion bailout in September, which was carried out in a tumultuous four-day period. After Edward Liddy took over as AIG chief executive, the company hired consultants to look at its payment plans around the world. One of Mr. Geithner's top bank supervisors at the New York Fed, Sarah Dahlgren, became the government's lead overseer of AIG. She sat in on AIG board meetings, joined at times by other top Fed staffers, and also participated in compensation-committee meetings. It isn't clear whether the issue rose to the board level until this month. AIG received an expanded government rescue in October and another in November, bringing the total to about $150 billion, including $40 billion in Treasury funds. In early November, the Fed, outside auditor Ernst & Young and AIG officials began examining through a committee the bonuses set to be paid to AIG's financial-products division, including those that sparked last week's furor. The committee concluded that the bonuses, which were in contracts signed before the government takeover, couldn't be legally blocked, according to a person familiar with the matter. The Obama administration has since agreed with that legal interpretation. AIG cited the retention plan in a public filing in early November, and Fed officials were aware AIG planned to pay $55 million in bonuses to financial-products employees the next month. Mr. Geithner remained involved in major AIG matters, seeking updates from Ms. Dahlgren and other top Fed staffers. He recused himself from dealing with aid to specific companies around the time of his Nov. 24 nomination as Treasury secretary."
Meantime, the House bill imposing a 90% tax on bonuses from firms receiving bailout money has hit a couple of speedbumps – most importantly President Obama himself.
On CBS' "60 Minutes" last night, Mr. Obama suggested that the bill is unconstitutional saying, "As a general proposition, you don't want to be passing laws that are just targeting a handful of individuals. You want to pass laws that have some broad applicability ... And as a general proposition, I think you certainly don't want to use the tax code...to punish people."
Earlier Sunday, Vice President Joe Biden's top economic adviser Jared Bernstein told ABC's "This Week", "I think the president would be concerned that this bill may have some problems in going too far -- the House bill may go too far in terms of some -- some legal issues, constitutional validity, using the tax code to surgically punish a small group ... That may be a dangerous way to go."
Politico's Kenneth P. Vogel reports, "The Senate is set to consider bonus tax legislation this week, possibly including the House bill and a Senate alternative that would levy a smaller 35-percent tax on a wider range of companies."
4830721BUDGET: Today, President Obama and Vice President Biden will receive their daily economic briefing with Treasury Secretary Geithner at 11:15am ET. At 12:30pm ET, Mr. Obama will deliver remarks about investments in clean energy and new technology that are included in his budget.
"Obama planned to make the case Monday for a budget proposal that invests billions in research designed to reduce climate change and guarantees loans for companies that develop clean energy technologies," reports the Associated Press' Philip Elliot. "Obama has tied his first budget proposal as president to a renewable energy program to help the United States move toward energy independence. ... Obama and his aides plan an aggressive push to deliver a $3.6 trillion budget that contains many of his campaign promises. He plans to speak about the energy portion of his budget at the White House on Monday, highlighting research and development in clean energy. He also will highlight how part of the $787 billion economic stimulus package already is working to create much-needed jobs. Obama plans to follow that with a prime-time news conference on Tuesday. The president is back in campaign mode as he stumps for a budget proposal that, so far, has faced opposition from members of both parties. Democrats worry the plan inflates deficit spending; the Congressional Budget Office estimates Obama's budget would generate $9.3 trillion in red ink over the next decade. Republicans say it would impose massive tax increases, including on polluters; Washington could raise billions from companies that use unclean fuels, what GOP leaders called a carbon tax."
The Wall Street Journal's Ian Talley points out, however, "The risk that President Barack Obama's plans to promote 'green jobs' could bog down amid local and state opposition to the transmission lines, windmills and other clean energy hardware is becoming an issue for both supporters and critics of the president's agenda. A new U.S. Chamber of Commerce Web site launched Friday catalogues 62 wind, wave, solar and biofuel projects and 15 high-voltage transmission proposals across 25 states that have faced significant local opposition, often enough to shut them down entirely. It also documents how 18 natural gas projects, 17 nuclear power plants and around 175 coal plants worth more than $62 billion in investments have encountered local antagonism. ... The administration and environmental groups say they recognize the potential for local opposition to be a major barrier to new renewable energy and transmission projects. And while they may disagree with the Chamber over modifications of project environmental reviews, they do want to give the federal government greater powers to clear the path for such projects."
ALSO TODAY: Vice President Biden meets with French Prime Minister Francois Fillon at 3:45pm ET.
THIS WEEK: Tomorrow night, the president will hold another prime time news conference on Tuesday at 8pm ET.
Also, Treasury Secretary Geithner will testify before the House Financial Services Committee on Tuesday and Thursday. On Wednesday, Geithner will speak to the Council on Foreign Relations in New York City.
On Wednesday night, Mr. Obama will headline the first fundraiser of his presidency this month, appealing to donors large and small even as the economy struggles through the worst recession in generations," write Bloomberg News' Hans Nichols and Jonathan D. Salant. "Obama's appearance at the Democratic National Committee's March 25 event at the Warner Theatre in Washington, with tickets ranging from $100 to $2,500 per person, will be an early test of his ability to keep up the record-breaking fundraising he achieved during the campaign. That may be difficult. While the president's approval rating remains above 60 percent in most polls, the U.S. is mired in the most severe financial crisis since the Great Depression. Those circumstances may close some checkbooks and force Obama to tone down his partisan appeals for cash at a time when he is trying to persuade Americans he is focused on fixing the economy."
AIG FALLOUT: Washington Times' Sean Lengell, "GOP banks on AIG outcry": "If Republicans have their way, AIG will remain a household name through the 2010 congressional elections - and possibly beyond. Party officials and strategists see the furor over executive bonuses at the bailed-out insurance giant as giving them an early issue to rally popular disgust at Wall Street in their favor. But Democrats counter that Republicans are exhibiting 'false rage' and that any attempt to blame them for wasting taxpayer money is hypocritical and will backfire."
NY Times' John Harwood, "For Populism, a Return to Economic Roots"
BUDGET / STIMULUS: Christian Science Monitor's Gail Russell Chaddock, "Will deficits trim Obama's agenda?"
Washington Post's Dan Eggen, "Foreign Firms Eye Stimulus Dollars"
OBAMA ADMINISTRATION: NY Times' Sheryl Gay Stolberg, "Leading Military at Time of War, but Not as 'War President'"
Politico's Josh Gerstein, "Econ board has yet to meet publicly"
NY Times' John M. Broder, "Energy Secretary Serves Under a Microscope"
MINNESOTA SENATE RECOUNT: Minneapolis Star Tribune's Pat Doyle, "The Coleman-Franken recount: Can it be over soon?"
Politico's Manu Raju, "GOP licks chops over Dem stumbles"
2010 CA Senate: San Francisco Chronicle's Carla Marinucci, "Predictions for Schwarzenegger's next big role": "For Californians who read political tea leaves, some signs are starting to emerge: A few months ago, the Republican was on the campaign trail for presidential candidate John McCain, lambasting Barack Obama as a guy with 'skinny legs,' 'scrawny little arms' and socialist ideas. On Thursday, there he was standing next to President Obama - hugging him and praising him as the nation's economic savior and reformer. The governor regularly dismisses talk of another political run - specifically for U.S. Senate - as something he's just not interested in, but recently he appeared to soften his words."
2010 CT Senate: Hartford Courant's Daniel Altimari, "GOP's Simmons Positions Himself As The Anti-Dodd"
2010 PA Senate: Wall Street Journal's Susan Davis, "Specter Facing Pressure From All Sices as 2010 Vote Nears"
2010 PA Senate: Philadelphia Inquirer's Tom Fitzgerald, "Toomey poised to take on Specter"
2010 UT Senate: Politico's Alex Isenstadt, "Utah's Bennett faces primary fight"
Politico's Michael Calderone, "Papers won't get bailout anytime soon"
Washington Post's Chris Cillizza, "Radical Change for a Moderate Bastion"
Washington Post's Dan Zak, "Skewers, but Not Much Sizzle, At Obamaless Gridiron Dinner"